Can Malaysia Rely on Local Workers to Replace Foreign Labour?

In a move to reduce reliance on foreign workers, the government decided to allow only three sectors to hire foreign workers: Construction, plantation and agriculture. But can Malaysian workers fill in the gaps?

Human Resources Minister Datuk Seri M. Saravanan said that from January to May 2020, the number of foreign workers in Malaysia dropped from 1.98 to 1.54 million. The minister said that the government is committed to giving locals the chance to fill the available vacancies.

Many Malaysians who were working in Singapore lost their jobs during the pandemic and Saravanan assured that the government will find the best way to provide employment opportunities to them.

Who will replace the foreign workers?

Traditionally, foreign workers were heavily used in sectors such as manufacturing and construction. The minister said that the government has frozen recruitment of foreign workers in order to give priority to local workers, especially youths, to secure employment. 

In July 2020, the Human Resources Ministry announced that 64,495 workers across different sectors in Malaysia have lost their job since early this year. In May, the unemployment rate rose to 5.3% which is the highest figure recorded since 1989 (5.7%).

Recently, the Malaysian Rubber Council (MRC) announced that it is setting up a special fund worth RM36 million to encourage the downstream industry, especially rubber glove producers, to hire more locals. According to the council, it will provide a wage subsidy of RM300 for one local worker for a period of 12 months.

The fund is hoped to provide job opportunities to 10,000 Malaysians that would replace 10,000 foreign workers in the rubber downstream sector especially in the rubber glove industry.

Incentives for hiring Malaysians

In June, Prime Minister Tan Sri Muhyiddin Yassin announced the launch of the Hiring Incentive Programme (PenjanaKerjaya). The programme is effective from 15th June 2020 until 31st December 2020. 

The Hiring Incentive Programme is divided into four categories:

• #MyApprentice: an incentive for employers who engage local job seekers who are school leavers and graduates as apprentices.
• #HireMalaysia: a hiring incentive to hire Malaysians who are under 40, above 40 and those under the vulnerable group.
• Mobility Assistance: A one-off payment for relocating employees.
• Training Programme: A reskilling and upskilling programme for employees

Should you start hiring Malaysians?

On July 29, the human resources ministry has clarified that the freeze on new foreign worker hires will remain until the end of the year. “The government’s policy with regard to the freeze on foreign worker intakes until the end of the year still remains due to the Covid-19 pandemic and its impact on the local job market,” it said.

There are still four months to go until the recruitment freeze ends and many businesses are starting to recover from the MCO. Even Gardenia is inviting Malaysians to apply for work.

Employers should also consider making full use of the Hiring Incentive Programme that can ease their burdens when reopening their businesses.

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